Uber Technologies Inc. could face unintended consequences of successfully keeping a class action out of court: 12,500 individual cases in arbitration that could put the company on the hook for nearly $19 million in fees.
At least that’s the hope of plaintiffs attorneys who just hit the ride-hailing giant en masse, asking a San Francisco federal judge to compel Uber to answer to thousands of arbitration claims filed in recent months—and to pay all the associated costs, as required by employment agreements.
Uber has successfully fought class action claims in trial and appellate courts from drivers who allege they were misclassified as independent contractors, and a recent U.S. Supreme Court decision, Epic Systems v. Lewis, said companies lawfully could force employees to waive class action rights.
Companies often tout the benefits of arbitration, saying the process provides employees a fast, cheaper way to make claims than going to court. Many employers even agree to pay associated fees to start and resolve cases. But the new petition in California contends Uber is slow-walking paying fees, or not paying any at all.
“For employers, this might say be careful what you ask for and you might get it,” said plaintiffs lawyer Joseph Sellers of Cohen Milstein Sellers & Toll. “This could force Uber to reckon with the consequences of the arbitration clause, which means very substantial costs, that would have been avoided had it been pursued together.”
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Cohen Milstein’s Sellers called the Uber case an outlier, but said these cases highlight the inefficiency of arbitration. Plaintiffs attorneys sometimes don’t have the ability to find all the members of class if it is decertified, he said. “In most instances we don’t know who else is in the class. We don’t have the time,” Sellers said. “This strategy, a clever strategy, is not readily available.”
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